The wireless giant's revenues are surging, but it's still struggling to make the most of its new corporate identity
The country's largest wireless company, San Antonio-based AT&T (T), announced on Sept. 11 that it would reshuffle some key elements of its corporate identity, revealing a communications giant still grappling to find its voice in the rapidly evolving cellular market.
AT&T said Tuesday it will further incorporate the signature Cingular orange hue into its branding, including online, on billing statements, and in its 1,900 U.S. stores. At the same time, the company will launch splashy new television and Internet marketing campaigns, including six nationally broadcast TV spots directed by Wes Anderson, whose films, including Rushmore and The Royal Tenenbaums, have attracted a stylish, hipster following. AT&T, working with agencies BBDO Worldwide, Rich Media, and Big Icon U.S., would not disclose how much it's spending to make the branding changes.
AT&T is still attempting to figure out a coherent brand proposition following its titanic $86 billion merger with one of Cingular's former parents, BellSouth, finalized last year. The union presented the company with an opportunity to transform itself from an old-world telecom into a cutting-edge wireless player. But many consumers still associate AT&T with old-fashioned landlines and 10-lb. phone books amid a world of high-speed digital networks and Web-based personal networking. Cingular, meanwhile, the roguish cellular upstart created by SBC and BellSouth seven years ago, had a more modern look that didn't jibe with AT&T's monolithic feel. Reconciling the two has provided a branding conundrum, and it's by no means clear that this latest round of redesigns has solved the company's identity issues.
The new proposition sees the company heading back to basics in an attempt to convey the seamless blend of both merged companies. And, in a move that suggests executives may regret having been so quick to ditch all things Brand Cingular (its quirky but memorable "Jack" logo, often shown bouncing around the screen in ads, was officially retired in May) the wireless company's characteristic effervescent orange will now get more prominent play throughout AT&T's wireless operations. Monthly billing statements adopted the new color in July, and everything from signs to marketing materials within AT&T's retail outlets should be complete by the end of next month. The company's Web site will be upgraded to reflect the new color while other updated elements such as building signs, awnings, and product packaging, will also roll out in the next few months.
The company's commitment to the new identity scheme may be reflected in its decision to make over its brick-and-mortar outlets. "Capital investment in the stores is usually a sign of a long-term brand investment, which is written off over a period of three to maybe five years," says Bill Gardner of the Wichita-based brand and design firm, Gardner Design. Gardner also runs the logo design Web site, Logolounge.com.
But, some branding experts are skeptical about how much effect adopting more of Cingular's orange can really have on AT&T's image. "Simply adding more color isn't going to change people's view of AT&T," says Tom Geismar, co-founder of the New York-based firm Chermayeff & Geismar, which has designed iconic corporate logos for companies including Mobil, Public Broadcasting Service, NBC (GE), and Intel (INTC). "Cingular's whole look and presentation was just much fresher."
"They may have underestimated how much equity was in the Cingular brand and are now trying to bring it back," says Rob Giampietro, one of the founders of the New York-based design studio, Giampietro+Smith. Simply attempting to blend the two further could confuse customers more, not less. "It suggests some lack of brand leadership," he warns. "What you could end up with is a 'bizzaro' version of what they think their customers' vision of the brand is." And that, as all branding experts preach, is a surefire way to appeal to no one in an attempt to attract everyone.
Even as the company feels its way through the transition, it has managed to strengthen its bottom line. In the second quarter of 2007, AT&T nearly doubled revenues, to $26.8 billion from the $14 billion of the same quarter the year before. The company's bottom-line growth also shot to $2.9 billion, from $1.8 billion. Of course, this year's figures include the bonuses of the merger, but even excluding boosts associated with mergers, revenues were up 2%.
And yet, since February, the company's stock has underperformed compared to the S&P 500 telecom and IT sector, which, on average, grew by more than 20%, while its share price remained relatively stagnant. To pull off the transformation, generate investor buzz, and continue stoking growth, AT&T is going to have to make itself relevant by proving it is a viable mobile brand.
Positive Partner, Confusing Campaign?
One almost purely positive step for AT&T has been the partnership with Apple (AAPL) to launch the iPhone, likely the most hotly anticipated consumer communications device in decades. The move has been effective in drawing younger customers and raising brand awareness. A quarter of iPhone buyers in July switched to AT&T's service from another carrier and 57% were 35 or younger, according to the El Segundo (Calif.)-based research firm iSuppli. Wendy Clark, AT&T's senior vice-president of advertising, says the massively scrutinized product launch allowed consumer awareness of AT&T as a wireless brand to finally surpass that of Cingular.
But partnerships and individual products can only do so much for AT&T's brand. A mounting chorus of grumbles about outlandish international bills and spotty service, not to mention the incensed outcry raised by Apple's $200 price drop just 66 days after the iPhone's launch, could potentially taint the product's distributed brand sheen. And, the iPhone remains an Apple product—the two companies' exclusivity deal reportedly runs out in 2012. Gene Munster, a senior analyst with the Minneapolis-based securities firm Piper Jaffray (PJC), estimates that Apple's own stores could be selling as many iPhones each day as AT&T stores do each week, suggesting the product is more associated with Apple than AT&T in the minds of consumers.
As for the new ad campaign itself, the TV spots feature mobile professionals and young people in front of quickly rotating backdrops intended to illustrate the "seamless world" of the company's mobile services. One of the ads features three locations in which a professional might live, work, and play: China, London, and Moscow. The conclusion: that "AT&T works in more places like Chilondoscow," an amalgamation of the names of those locations.
In trying to combine a handful of different places and ideas, the spots could potentially confuse more than clarify, though the company alleges that customers responded positively to the ads in market testing. It remains to be seen whether consumers will connect with the quirky, difficult-to-pronounce names like New Sanfrakota (New York, San Francisco, South Dakota) and Newbosmento (New York, Boston, Sacramento). Or if they'll respond to this "new" wireless brand that, it seems, is still living somewhere between the old Cingular and the new AT&T.
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